372 U.S.

29
83 S.Ct. 594
9 L.Ed.2d 561

UNITED STATES, Appellant,

v.
NATIONAL DAIRY PRODUCTS CORP. et al.
No. 18.
Reargued Dec. 5, 1962.
Decided Feb. 18, 1963.
Rehearing Denied April 1, 1963.

See 372 U.S. 961, 83 S.Ct. 1011.

Daniel M. Friedman, Washington, D.C., for appellant.
John T. Chadwell, Chicago, Ill., for appellees.
Mr. Justice CLARK delivered the opinion of the Court.

This case involves the question whether 3 of the Robinson-Patman Act, 15

U.S.C. 13a, making it a crime to sell goods at 'unreasonably low prices for the
purpose of destroying competition or eliminating a competitor,' is
unconstitutionally vague and indefinite as applied to sales made below cost with
such purpose. National Dairy and Raymond J. Wise, a vice-president and
director, upon being charged, inter alia, with violating 3 by making sales
below cost for the purpose of destroying competition, moved for dismissal of
the Robinson-Patman Act counts of the indictment on the ground that the
statute is unconstitutionally vague and indefinite. The District Court granted the
motion and ordered dismissal. On direct appeal under the Criminal Appeals
Act, 18 U.S.C. 3731, we noted probable jurisdiction, 368 U.S. 808, 82 S.Ct.
45, 7 L.Ed.2d 19, because of the importance of the issue in the administration
of the Robinson-Patman Act. We have concluded that the order of dismissal
was error and therefore remand the case for trial.

I.
2

National Dairy is engaged in the business of purchasing, processing,

National Dairy is engaged in the business of purchasing, processing,

distributing and selling milk and other dairy products throughout the United
States. Through its processing plant in Kansas City, Missouri, National Dairy
has for the past several years been in competition with national concerns and
various local dairies in the Greater Kansas City area and the surrounding areas
of Kansas and Missouri. In the Greater Kansas City market National Dairy
distributes its products directly, but cities and towns in the surrounding Kansas
and Missouri areas outside this market are served by independent distributors
who purchase milk from National Dairy and resell on their own account.

The indictment charged violations of both the Sherman Act, 15 U.S.C. 1, and
the Robinson-Patman Act in Kansas City and in six local markets in the
adjacent area.1 The Robinson-Patman counts charged National Dairy and Wise
with selling milk in those markets 'at unreasonably low prices for the purpose
of destroying competition.' Further specifying the acts complained of, the
indictment charged National Dairy with having 'utilized the advantages it
possesses by reason of the fact that it operates in a great many different
geographical localities in order to finance and subsidize a price war against the
small dairies selling milk in competition with it * * * by intentionally selling
milk (directly or to a distributor) at prices below National's cost.' In five of the
markets National Dairy's pricing practice was alleged to have resulted in 'severe
financial losses to small dairies,' and in two others the effect was claimed to
have been to 'eliminate competition' and 'drive small dairies from' the market.

National Dairy and Wise move to dismiss all of the Robinson-Patman counts
on the grounds that the statutory provision, 'unreasonably low prices,' is so
vague and indefinite as to violate the due process requirement of the Fifth
Amendment and an indictment based on this provision is violative of the Sixth
Amendment in that it does not adequately apprise them of the charges. The
District Court, after rendering an oral opinion holding that 3 of the RobinsonPatman Act is unconstitutionally vague and indefinite, granted the motion and
ordered dismissal of the 3 counts. The case came here on direct appeal from
the order of dismissal.

II.
5

National Dairy and Wise urge that 3 is to be tested solely 'on its face' rather
than as applied to the conduct charged in the indictment, i.e., sales below cost
for the purpose of destroying competition. The Government on the other hand,
places greater emphasis on the latter, contending that whether or not there is
doubt as to the validity of the statute in all of its possible applications, s 3 is
plainly constitutional in its application to the conduct alleged in the indictment.

It is true that a statute attacked as vague must initially be examined 'on its face,'
but it does not follow that a readily discernible dividing line can always be
drawn, with statutes falling neatly into one of the two categories of 'valid' or
'invalid' solely on the basis of such an examination.

We do not evaluate 3 in the abstract.

'The delicate power of pronouncing an Act of Congress unconstitutional is not

to be exercised with reference to hypothetical cases * * *. (A) limiting
construction could be given to the statute by the court responsible for its
construction if an application of doubtful constitutionality were * * * presented.
We might add that application of this rule frees the Court not only from
unnecessary pronouncement on constitutional issues, but also from premature
interpretations of statutes in areas where their constitutional application might
be cloudy.' United States v. Raines, 362 U.S. 17, 22, 80 S.Ct. 519, 4 L.Ed.2d
524 (1960).

The strong presumptive validity that attaches to an Act of Congress has led this
Court to hold many times that statutes are not automatically invalidated as
vague simply because difficulty is found in determining whether certain
marginal offenses fall within their language. E.g., Jordan v. De George, 341
U.S. 223, 231, 71 S.Ct. 703, 707, 95 L.Ed. 886 (1951), and United States v.
Petrillo, 332 U.S. 1, 7, 67 S.Ct. 1538, 1541, 91 L.Ed. 1877 (1947). Indeed, we
have consistently sought an interpretation which supports the constitutionality
of legislation. E.g., United States v. Rumely, 345 U.S. 41, 47, 73 S.Ct. 543,
546, 97 L.Ed. 770 (1953); Crowell v. Benson, 285 U.S. 22, 62, 52 S.Ct. 285,
296, 76 L.Ed. 598 (1932); see Screws v. United States, 325 U.S. 91, 65 S.Ct.
1031, 89 L.Ed. 1495 (1945).

10

Void for vagueness simply means that criminal responsibility should not attach
where one could not reasonably understand that his contemplated conduct is
proscribed. United States v. Harriss, 347 U.S. 612, 617, 74 S.C. 808, 811, 98
L.Ed. 989 (1954). In determining the sufficiency of the notice a statute must of
necessity be examined in the light of the conduct with which a defendant is
charged. Robinson v. United States, 324 U.S. 282, 65 S.Ct. 666, 89 L.Ed. 944
(1945). In view of these principles we must conclude that if 3 of the
Robinson-Patman Act gave National Dairy and Wise sufficient warning that
selling below cost for the purpose of destroying competition is unlawful, the
statute is constitutional as applied to them.2 This is not to say that a beadsight
indictment can correct a blunderbuss statute, for the latter itself must be
sufficiently focused to forewarn of both its reach and coverage. We therefore

consider the vagueness attack solely in relation to whether the statute

sufficiently warned National Dairy and Wise that selling 'below cost' with
predatory intent was within its prohibition of 'unreasonably low prices.'
III.
11

The history of 3 of the Robinson-Patman Act indicates that selling below

cost, unless mitigated by some acceptable business exigency, was intended to
be prohibited by the words 'unreasonably low prices.' That sales below cost
without a justifying business reason may come within the proscriptions of the
Sherman Act has long been established. See e.g., Standard Oil Co. of New
Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911). Further,
when the Clayton Act was enacted in 1914 to strengthen the Sherman Act,
Congress passed 2 to cover price discrimination by large companies which
compete by lowering prices, 'oftentimes below the cost of production * * *with
the intent to destroy and make unprofitable the business of their competitors.'
H.R.Rep.No.627, 63d Cong., 2d Sess. 8. The 1936 enactment of the RobinsonPatman Act was for the purpose of 'strengthening the Clayton Act provisions,'
Federal Trade Comm. v. Anheuser-Busch, Inc., 363 U.S. 536, 544, 80 S.Ct.
1267, 1272, 4 L.Ed.2d 1385 (1960), and the Act was aimed at a specific
weapon of the monopolistpredatory pricing. Moreover, 3 was described by
Representative Utterback, a House manager of the joint conference committee,
as attaching 'criminal penalties in addition to the civil liabilities and remedies
already provided by the Clayton Act.' 80 Cong.Rec. 9419.

12

This Court, in Moore v. Mead's Fine Bread Co., 348 U.S. 115, 75 S.Ct. 148, 99
L.Ed. 145 (1954), a case based in part on 3, recognized the applicability of
the Robinson-Patman Act to conduct quite similar to that with which National
Dairy and Wise are charged here. The Court said, 'Congress by the Clayton Act
and Robinson-Patman Act barred the use of interstate business to destroy local
business' through programs in which 'profits made in interstate activities would
underwrite the losses of local price-cutting campaigns.' Id. at 120, 119, 75 S.Ct.
at 151, 150.

13

In proscribing sales at 'unreasonably low prices for the purpose of destroying

competition or eliminating a competitor' we believe that Congress condemned
sales made below cost for such purpose. And we believe that National Dairy
and Wise could reasonably understand from the statutory language that the
conduct described in the indictment was proscribed by the Act. They say,
however, that this is but the same horse with a different bridle because the
phrase 'below cost' is itself a vague and indefinite expression in business.

14

Whether 'below cost' refers to 'direct' or 'fully distributed' cost or some other
level of cost computation cannot be decided in the abstract. There is nothing in
the record on this point, and it may well be that the issue will be rendered
academic by a showing that National Dairy sold below any of these cost levels.
Therefore, we do not reach this issue here. As we said in Automatic Canteen
Co. of American v. Federal Trade Comm., 346 U.S. 61, 65, 73 S.Ct. 1017,
1020, 97 L.Ed. 1454 (1953): 'Since precision of expression is not an
outstanding characteristic of the Robinson-Patman Act, exact formulation of
the issue before us is necessary to avoid inadvertent pronouncement on
statutory language in one context when the same language may require separate
consideration in other settings.'

15

Finally, we think the additional element of predatory intent alleged in the

indictment and required by the Act provides further definition of the prohibited
conduct. We believe the notice here is more specific than that which was held
adequate in Screws v. United States, 325 U.S. 91, 65 S.Ct. 1031, 89 L.Ed. 1495
(1945), in which a requirement of intent served to 'relieve the statute of the
objection that it punishes without warning an offense of which the accused was
unaware.' Id. at 102, 65 S.Ct. at 1036; see id. at 101107, 65 S.Ct. at 1035
1038. Proscribed by the statute in Screws was the intentional achievement of a
result, i.e., the willful deprivation of certain rights. The Act here, however, in
prohibiting sales at unreasonably low prices for the purpose of destroying
competition, listed as elements of the illegal conduct not only the intent to
achieve a resultdestruction of competition but also the actselling at
unreasonably low pricesdone in furtherance of that design or purpose. It
seems clear that the necessary specificity of warning is afforded when, as here,
separate, though related, statutory elements of prohibited activity come to focus
on one course of conduct.

16

United States v. L. Cohen Grocery Co., 255 U.S. 81, 41 S.Ct. 298, 65 L.Ed.
516 (1921), on which much reliance is placed, is inapposite here. In Cohen the
Act proscribed 'any unjust or unreasonable rate or charge.' The charge in the
indictment was in the exact language of the statute, and, in specifying the
conduct covered by the charge, the indictment did nothing more than state the
price the defendant was alleged to have collected. Hence, the Court held that a
'specific or definite' act was neither proscribed by the Act nor alleged in the
indictment. Id. at 89, 41 S.Ct. at 300. Moreover, the standard held too vague in
Cohen was without a meaningful referent in business practice or usage. '(T)here
was no accepted and fairly stable commercial standard which could be regarded
as impliedly taken up and adopted by the statute * * *.' Small Co. v. American
Sugar Rfg. Co., 267 U.S. 233, 240241, 45 S.Ct. 295, 297, 69 L.Ed. 589
(1925). In view of the business practices against which 3 was unmistakably

directed and the specificity of the violations charged in the indictment here,
both absent in Cohen, the proffered analogy to that case must be rejected.
17

In this connection we also note that the approach to 'vagueness' governing a

case like this is different from that followed in cases arising under the First
Amendment. There we are concerned with the vagueness of the statute 'on its
face' because such vagueness may in itself deter constitutionally protected and
socially desirable conduct. See Thornhill v. Alabama, 310 U.S. 88, 98, 60 S.Ct.
736, 742, 84 L.Ed. 1093 (1940); N.A.A.C.P. v. Button, 371 U.S. 415, 83 S.Ct.
328. No such factor is present here where the statute is directed only at conduct
designed to destroy competition, activity which is neither constitutionally
protected nor socially desirable. We are thus permitted to consider the warning
provided by 3 not only in terms of the statute 'on its face' but also in the light
of the conduct to which it is applied. The reliance of National Dairy and Wise
on First Amendment cases is therefore misplaced.

IV.
18

This opinion is not to be construed, however, as holding that every sale below
cost constitutes a violation of 3. Such sales are not condemned when made in
furtherance of a legitimate commercial objective, such as the liquidation of
excess, obsolete or perishable merchandise, or the need to meet a lawful,
equally low price of a competitor. 80 Cong.Rec. 6332, 6334; see Ben Hur Coal
Co. v. Wells, 242 F.2d 481 (C.A.10th Cir., 1957). Sales below cost in these
instances would neither be 'unreasonably low' nor made with predatory intent.
But sales made below cost without legitimate commercial objective and with
specific intent to destroy competition would clearly fall within the prohibitions
of 3.

19

Since the indictment charges the latter conduct and, as noted, supra, n. 2, we
are bound by the well-pleaded allegations of the indictment, we must conclude
that National Dairy and Wise were adequately forewarned of the illegal conduct
charged against them and remand the case for trial. Our holding, of course,
does not foreclose proof on the merits as to the reasonableness of the alleged
pricing conduct or, for that matter, the absence of the predatory intent necessary
to conviction.

20

Reversed and remanded.

21

Mr. Justice BLACK, with whom Mr. Justice STEWART and Mr. Justice
GOLDBERG join, dissenting.

22

The statute here involved makes it a crime to sell 'goods at unreasonably low
prices for the purpose of destroying competition or eliminating a competitor.'
15 U.S.C. 13a. In United States v. L. Cohen Grocery Co., 255 U.S. 81, 41
S.Ct. 298, 65 L.Ed. 516 (1921), this Court held unconstitutional and void for
vagueness a statute which made it a crime 'for any person willfully * * * to
make any unjust or unreasonable rate or charge' in dealing in or with any
necessaries. The rule established by that case has been often followed,1 is in my
judgment sound, and should control this case. Accordingly, I would affirm the
District Court's judgment holding the statute invalid. The Court here attempts
by interpretation to substitute unambiguous standards for the vague standard of
'unreasonably low prices' used by Congress in the statute. It seems to me that if
this criminal statute is to be so drastically reconstructed it should be done by
Congress, not by us. Moreover, I agree with the Attorney General's National
Committee to Study the Antitrust Laws, which concluded:

23

'Doubts besetting Section 3's constitutionality seem well founded; no gloss

imparted by history or adjudication has settled the vague contours of this harsh
criminal law.'2

Seven counts of the 15-count indictment charged violations of 3 of the

Robinson-Patman Act. The Sherman Act and Robinson-Patman Act counts
relate to the same course of conduct.
One Robinson-Patman count, number 13, charges Raymond J. Wise, a
vicepresident and director of National, with authorizing National's pricing
practice and ordering its effectuation in the Kansas City market. United States
v. Wise, 370 U.S. 405, 82 S.Ct. 1354, 8 L.Ed.2d 590 (1962), involves two
Sherman Act counts of the indictment which named Wise as a defendant.

It should be noted that, in reviewing a case in which a motion to dismiss was

granted, we are required to accept well-pleaded allegations of the indictment as
the hypothesis for decision. Boyce Motor Lines v. United States, 342 U.S. 337,
343, 72 S.Ct. 329, 332, 96 L.Ed. 367 (1952).

E.g., Cline v. Frink Dairy Co., 274 U.S. 445, 47 S.Ct. 681, 71 L.Ed. 1146
(1927); Lanzetta v. New Jersey, 306 U.S. 451, 59 S.Ct. 618, 83 L.Ed. 888
(1939); cf. United States v. Cardiff, 344 U.S. 174, 73 S.Ct. 189, 97 L.Ed. 200
(1952)9

Atty.Gen.Nat.Comm. Antitrust Rep. 201 (1955) (recommending repeal of 3).